China Confidential’s Freight Volume Index eased slightly on a MoM basis in early December but strong rail freight readings signified that China’s recent upsurge in fixed-asset investment remained on track. Correcting for seasonal factors such as the snowfalls in northern areas, we think that overall logistics and manufacturing activity in December is likely to have remained roughly at November levels.
Home prices rose at a faster pace in November than in previous months, according to China’s National Bureau of Statistics (NBS). Meanwhile, home purchases so far in December remain at a high, according to local sales data monitored by China Confidential. We do not expect the government to take any direct measures to cool the market in the near-term, but anticipate a continuation of the measures seen in recent days to cap land prices.
Capital intensive China has struggled this year, but we believe that it will fare better in 2013
There has been a flurry of announced expansions to China’s power grid network this month. This is positive news for the copper industry but could be less good for China’s coal miners, as an expanded grid network has the potential to depress coal prices in the long term.
National Bureau of Statistics (NBS) data confirms a sharp rebound in home sales in November, with the real estate sector returning to strength across the board. Sales have remained at these high levels so far in December, confirming our impression of strong underlying growth rather than a further upsurge.
China Confidential’s Freight Volume Index fell slightly on a MoM basis in early December, due in part to seasonal factors, but remained broadly stable, as an increase in rail freight volumes was cancelled out by a decrease in road freight
Steel prices have fallen sharply in recent weeks, but production cuts at smaller producers and a drawdown of inventories suggest that steel mills are now better-positioned to tap into demand from the recovering construction sector.
Foreign investors are seeking direct exposure to Chinese real estate through buying into REITs but rewards and risks are on offer in equal measure
Pushed by higher costs, some Chinese companies are climbing the technology ladder and creating substitutes for imports.
Reforms to the way in which contract coal is priced have been approved by China’s State Council, the nation’s cabinet, according to reports in state media. This is in line with our expectations (CC Nov 29, Capital Intensive) and follows on from the strongly reform-minded statement issued after a meeting of the country’s politburo on Tuesday.
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